Making the Tech Giants Pay

On July 31st, the Australian Competition and Consumer Commission published a draft of its new mandatory code for the bargaining process between news publishers and tech giants, beginning with Google and Facebook. This was no surprise — the Australian government had been signalling for months that this was the direction it was headed.

In 2019, Google and Facebook pulled in A$400 million more in Australian advertising revenue than the combined total of five major domestic media companies. Meanwhile, the tech companies are notorious for paying low tax rates in Australia — the same as in many other parts of the world — because they use shady tax schemes to book the revenue in low-tax jurisdictions like Singapore.

Google has responded to the code with an open letter claiming its services will be “drastically worse” in Australia if it comes into force, and has been placing banners on the Google and YouTube homepages to try to scare Australian consumers. The ACCC claims the letter misinforms people about what the code would actually do.

Facebook, meanwhile, is threatening to stop news content from being shared in Australia altogether to avoid paying news publishers. Google has previously used the same tactic in Europe, pulling Google News in Spain and France, and threatening to do so across the whole of the European Union in response to similar laws. In April, a French court ruled that Google couldn’t simply remove its News service — it had to pay up.

In Australia, the situation continues to escalate, with Prime Minister Scott Morrison saying on September 7th that his government won’t respond well to “coercion” from the platform giants. Canada’s Heritage Minister recently made a statement in support of the Australians as it looks to pursue a similar policy, and it’s likely more European countries will follow France’s example.

It’s clear that journalism is struggling and that the tech companies aren’t paying enough in tax, even as the United States is trying to disrupt international efforts to develop a new taxation scheme for global multinational corporations. But what is not clear is that forcing tech companies to pay news publishers is the right policy solution.

Funding the Future

In his new book How to Destroy Surveillance Capitalism, Cory Doctorow argues that we face a choice in how to address the power of the tech giants: “breaking up Big Tech and depriving them of monopoly profits, or… making them spend their monopoly profits on governance.” We can’t do both.

Doctorow’s argument is that if we build them into governance frameworks, or media funding models, for example, it becomes harder to really address the core problem, which is the power they derive from their effective monopoly. So, if we make the funding of media dependent on the success of Google and Facebook, that makes it pretty hard to then dismantle them, replace them, or rethink the broader composition of the internet.

That doesn’t mean the media doesn’t need support, or that we should simply look to somehow revive the advertising model. Despite claims of editorial independence, advertisers always had some sway over the content that got published. Why do you think so many newspapers had auto and real estate sections? They bought a tonne of adverts — if not more than that.

The subscription model currently sweeping the news business also isn’t the solution. Nathan J. Robinson, the editor of Current Affairs, argues the paywalls going up at most of the reputable news websites are poisoning the public discourse by sending people to Fox News, InfoWars, or Guido Fawkes. As he put it, “the truth is paywalled but the lies are free.” And the BBC isn’t necessarily going to save us, given its increasing acquiescence to the Conservatives.

What we need instead is a plan for public funding of the media that seeks to revive the ability to do more in-depth investigative reporting, can hold power to account, and places a priority on local journalism. There are many ways that could work.

A recent report on digital infrastructure by Mat Lawrence, Thomas Hanna, Miriam Brett, and Adrienne Buller included the suggestion that the proceeds of spectrum auctions be put into a fund to support local media and journalism. Victor Pickard, author of Democracy Without Journalism?, has similarly suggested the creation of a trust funded by a number of new taxes that would support independent public media.

In the UK, Tom Mills, Dan Hind, and Leo Watkins have laid out a plan that would see the television licence fee replaced with a digital licence fee on internet to fund a democratised BBC that actually responds to the public. Their plan would also grant everyone over the age of 14 an annual voucher they could use to support non-profit co-operative journalism, divided evenly between regional and national media. It would be funded by a tax on advertising or public relations services.

Don’t Link Media to Tech

The future of journalism, especially that which isn’t just chasing clicks and giving surface-level analyses that serve reactionary interests, is in jeopardy. It’s clear that we need to come up with a better way of funding and organising journalism, but we should be wary of hitching its wagon to the tech giants.

The tech giants should be taxed, their monopolies broken up, and their power should be reined in. But we shouldn’t put in place an infrastructure where Google and Facebook are directly paying news publishers. There are much better ways of organising alternative funding models for media that much better serve the public good and journalists themselves.